French finance, regional and national governments and the city of Paris showed a rare unity of purpose this week in attempting to lure bankers, brokers, start-ups and investors from the City of London to Paris following the June 23rd Brexit vote.
Prime Minister Manuel Valls became the first French head of government to address the annual meeting of the financial lobby Europlace.
“We want Paris to become the leading financial centre in Europe,” Mr Valls told an international audience of 800, of whom a quarter were foreign.
Valérie Pécresse, the president of the Ile-de-France (Paris) region promised, in English, to “roll out the blue, white and red carpet” to new arrivals from the City of London.
Ms Pécresse estimates that between 10,000 and 30,000 jobs could move from London to Paris. “Every one of these jobs creates another three or four in commerce, services and property,” she added.
‘My enemy is finance’
French officials know they are fighting an uphill battle. In January 2012, then presidential candidate Francois Hollande said in a campaign speech, "My enemy is finance." On coming to office, Mr Hollande established a 75 per cent tax bracket on the highest salaries, which was quickly abandoned at the urging of then finance minister Pierre Moscovici.
Mr Valls joked about the 75 per cent tax rate, saying that “patriotic” members of the audience “would be thanked for explaining to British media that it no longer exists.”
High tax
French taxes and social charges nonetheless remain among the highest in Europe. On Tuesday, the British Chancellor of the Exchequer announced that Britain will reduce its corporate tax rate from 20 per cent to 15 per cent.
Mr Valls reconfirmed Mr Hollande’s promise to lower French corporate tax from 33 per cent at present to 28 per cent, by 2020.
Mr Valls announced an “impatriation bonus” which he called “the most competitive in Europe”. French citizens and foreigners who have worked outside France for at least five years enjoy a 30 to 50 per cent reduction in income tax for five years, which Mr Valls will extend to eight. The employers of “impatriates” will be exonerated from payroll taxes on their salaires.
Other measures intended to increase the attractiveness of Paris include investment in infrastructure such as the express train to Roissy airport, and development of “le Grand Paris” beyond the périphérique ring road.
Sense of urgency
The government emphasises the availability of offices and apartments. It intends to establish a one-stop address for businesses wanting to set up in France, and promises to increase the number of bilingual classes for the children of foreign financiers.
Francois Villeroy de Galhau, the governor of the Banque de France, promised that the ACPR, which grants authorisations to banks and insurance companies entering the French market, will respond "promptly" to requests from applicants already established elsewhere in Europe.
French officials show a sense of urgency. Italy is seeking the transfer of European banking and medical agencies from London. Dublin, Frankfurt, Luxembourg and Madrid are fierce competitors to receive Brexit exiles.
